Correlation Between Synchrony Financial and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and WESTERN DIGITAL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Synchrony Financial and WESTERN DIGITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and WESTERN DIGITAL, you can compare the effects of market volatilities on Synchrony Financial and WESTERN DIGITAL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Synchrony Financial with a short position of WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and WESTERN DIGITAL.
Diversification Opportunities for Synchrony Financial and WESTERN DIGITAL
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Synchrony and WESTERN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL and Synchrony Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Synchrony Financial are associated (or correlated) with WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between Synchrony Financial and WESTERN DIGITAL
Assuming the 90 days horizon Synchrony Financial is expected to generate 0.86 times more return on investment than WESTERN DIGITAL. However, Synchrony Financial is 1.16 times less risky than WESTERN DIGITAL. It trades about 0.07 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.05 per unit of risk. If you would invest 3,173 in Synchrony Financial on October 16, 2024 and sell it today you would earn a total of 2,998 from holding Synchrony Financial or generate 94.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. WESTERN DIGITAL
Performance |
| Timeline |
| Synchrony Financial |
| WESTERN DIGITAL |
Synchrony Financial and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and WESTERN DIGITAL
The main advantage of trading using opposite Synchrony Financial and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, WESTERN DIGITAL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| Synchrony Financial vs. RETAIL FOOD GROUP | Synchrony Financial vs. ALTAIR RES INC | Synchrony Financial vs. Ryanair Holdings plc | Synchrony Financial vs. DELTA AIR LINES |
| WESTERN DIGITAL vs. Direct Line Insurance | WESTERN DIGITAL vs. CVB Financial Corp | WESTERN DIGITAL vs. REVO INSURANCE SPA | WESTERN DIGITAL vs. CDN IMPERIAL BANK |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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